* Output rises 0.3 pct despite one less workday
* Fiat leads sales; GM nearly ties VW for second place
SAO PAULO, June 6 (Reuters) - Brazil produced a record number of automobiles in May as car makers took advantage of tax breaks on locally made vehicles.
Production edged up 0.3 percent from April to 348,100 new cars, trucks and buses, the national automakers association Anfavea said on Thursday. The rise came despite one less workday in May, which led to a 5.2 percent sales drop.
Concerned that weak demand was hurting a sector making up a quarter of Brazil's industrial output, President Dilma Rousseff announced tax breaks last May for locally made cars and trucks. The lower industrial taxes, which are passed on to consumers, have been extended to the end of 2013.
Brazil is the world's fourth-biggest car market. More than 70 percent of the market is concentrated among Italy's Fiat SpA , Germany's Volkswagen AG and U.S.-based General Motors Co and Ford Motor Co.
Fiat remained Brazil's top seller of cars and light trucks in May, with 67,846 new registrations, down 2 percent from April. VW barely held second place over GM, selling 53,868 passenger vehicles last month compared to the U.S. automaker's 53,824 cars and light trucks. Ford sold 27,545 vehicles.
Korean car maker Hyundai Motor Co moved up the sales ranks in May, passing Renault SA with 19,091 new registrations compared to the French rival's 18,110 sales.